How will good cause eviction change New York City real estate?
We will demystify this topic in the following video.
My name is Nick at Hauseit, we are the largest reduced commission platform for buyers and
sellers here in New York City.
Visit our website http://www.hauseit.com to learn about ways to save and reduce your buyer
closing costs or seller closing costs when transacting in New York City.
Now let's get started.
Legislators in Albany, New York have recently been working on good cause eviction legislation
Senate bill S2892B which have passed into law would cap annual rent increases in New
York City to 3% for all apartment types including market rate units and essentially require
landlords to perpetually continue a tenancy.
The proposed legislation would apply to all types of rental units including individual
condo and co-op units as well as rental buildings whether regulated or market rate.
The bill's sponsor is New York state senator Julia Salazar who represents the 18th Senate
District.
This includes the Brooklyn neighborhoods of Bushwick, Cypress Hills, Greenpoint and Williamsburg
with parts of Bed-Stuy, Brownsville and East New York.
This proposed legislation is just one of many recent legislative changes affecting New York
City which largely strengthened ten protections at the expense of landlords.
Recently passed legislative changes affecting New York City include a cap on security deposits
as well as the potential prohibition on traditional rental broker fees.
Now New York is just one of many states which have enacted tenant friendly legislation in
recent years.
In 2019 Oregon became the first state to enact a statewide rent control policy and this caps
rent hikes at 7% plus inflation during any 12-month period.
Does the annual rent increase cap apply to individual condo and co-op units?
Yes, the good cause eviction legislation as currently written prohibits annual rent increases
in excess of 3% for all types of apartments including individual condo and co-op units.
The most recent version of the legislation allows for rent increases of 3% or 150% of
the Consumer Price Index, whichever is higher.
The inclusion of outright limits on the annual rental rate increases for market rate apartments
in this legislation is why many industry participants have labeled this as universal rent control.
Keep in mind that this language is preliminary and it's likely to change in some way if this
legislation actually moves forward.
Can I refuse to renew a tenant if I want to move into my apartment or sell?
The good cause eviction legislation as currently written provides no right for a landlord of
a unit in a building with more than 12 apartments to recover an apartment for personal or family
use.
Landlords and buildings with less than 12 units would need to prove a compelling and
immediate necessity to non-renew a tenant and recover a unit.
If a unit is in the building with fewer than five units the legislation as currently written
does not permit a landlord to recover the unit for a family member.
Under the legislation, landlords are required to show just cause for not renewing a lease
which presumably includes direct violations of the lease terms.
For example, using an apartment for illegal activity would give a landlord grounds for
non-renewal of a lease.
Under this proposed legislation will good cause eviction legislation reduce apartment
values in New York City?
Most likely yes, caps on rent increases will undoubtedly make owning residential real estate
in New York City less desirable both for large investors as well as small-time landlords
and individual owners.
More worryingly, restrictions and limitations on non-renewals and the ability to easily
recovery for personal or family use will strongly deter individuals from buying versus continuing
to rent.
For example, a prospective purchaser of a condo in a small apartment building whose
job may require one to two years stays abroad would be unlikely to buy versus rent since
it would be nearly impossible to recover the unit from the tenant and move back into it
upon returning to New York City.
The legislation as currently written provides no clear ability for an owner to recover a
unit and non-renew a lease if she or he wants to sell an apartment. And because prospective
purchasers would be more inclined to buy a primary residence versus an investment property.
Under the new legislation, owners who must sell with a tenant in place due to the good
cause eviction regulation would receive significantly less money when selling.
Good cause eviction legislation will also reduce the value of rental buildings because
it's unclear whether the mandatory caps on rental increases would allow building revenue
to keep up with rising building expenses such as real estate taxes and utility costs which
have often exceeded the rate of inflation in recent years.
We hope you found this video helpful.
My name is Nick at Hauseit.
Visit our website http://www.hauseit.com to learn about ways to save money when buying
and selling.
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